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Monday, April 6, 2009

Crown denies investment talks-Las Vegas

James Packer's Crown has denied reports that it was considering buying into the most expensive privately funded construction project in US history, a $US8.6 billion ($12 billion) Las Vegas hotel and casino development.Company spokesman, and former chief financial officer Geoff Kleemann said the company was "not interested in CityCenter at all".''We are not looking at it. It was a made up story by someone at the Wall Street Journal,'' Mr Kleemann said.In a statement to the exchange, Crown said it was not ''having any discussions with (CityCenter owners) MGM or Dubai World with respect to any such investment in CityCenter''.He denied the statement had been carefully worded so as to allow the company to deny a direct interest, or direct negotiations, and continue to pursue an indirect or minority interest through a partner or partners.He said the company was not considering investing in the project indirectly, via increasing its investment with US private equity firm Colony Capital."It is very clear, it means we are not investing in it," Mr Kleemann said.Crown owns its stake in another Las Vegas casino company indirectly. It owns its stake in Stations through an investment in the US private equity firm Colony Capital, which owns and part owns 18 casinos in and around Las Vegas. Mr Kleemann has previously stated that the ownership of Stations, a private company, was similar to owning "units in a fund . . . it is straight equity".Mr Kleemann would not be drawn into why CityCenter was not of interest, and said he "wouldn't know" how much a stake would be sold for.However Colony Capital is still interested in buying a stake.Crown has the capacity on its balance sheet to make an acquisition worth $1.785 billion based on a multiple of seven times earnings before interest, taxes, depreciation and amortisation.The bulk of this comes from the $US1.4 billion Crown saved by pulling out of its bid for three US casinos last month and instead striking a smaller deal.The CityCenter project, worth $US8.6 billion, has been teetering on the edge of bankruptcy since Dubai World last week refused to pay its share of a $US200 million monthly funding payment.The refusal came as Dubai World sued MGM for huge cost blowouts on the project, which is due to open in December.The $200 million cash infusion was vital to fund the final construction of the CityCenter project.MGM Mirage was able to save the project from collapse by paying the full $200 million. But the pair must fund a further $US800 million to qualify for $US1.8 billion in loans.The project includes a 61-storey casino-hotel, two additional hotels, apartments, shops and entertainment stretching over 31 hectares on the Las Vegas Strip.